Hello, friends from the media, analyst friends, ladies and gentlemen, good afternoon. Welcome to the 2019 annual result announcements of China Construction Bank. I thank all of you for the care and support that you have shown to the bank all along, especially during the time of epidemics. You are willing to join our presentation via telephone. I thank you for your understanding and your support. We have about an hour and 15- minutes for us today. Those senior members with us are Mr. Zhang Gengsheng and Mr. Ji Zhihong, Vice Presidents, and CFO, Mr. Xu Yiming, and Chief Risk Officer, Mr. Jin Yanmin, and Mr. Hu Changmiao, the Secretary. We also have some other directors and supervisors with us, as well as some department heads. I am the President, Mr. Liu Guiping.
Prior to beginning, the 2019 annual report, as well as our performance information, has already been uploaded to our website. I will just briefly walk you through it. In 2019, facing uncertainties from the external environment as well as risks and challenges, we have lived up to the compliance requirement of the country to enhance the building of the nation and to enhance our capabilities in financial risk management, as well as our international competitiveness. We are working on the strategy of inclusive finance, fintech, as well as the mortgage market. We have very good core statistics, and we have built a stable, high quality, and sustainable development. Last Friday, after the board of directors meeting, our report and our statements have been disclosed to you, and many media and friends have already went through it.
Take this opportunity, I would like to tell you that looking from our performance, we can find three characteristics. It is good, stable, and sustainable. As far as good is concerned, our total balance sheet is going on a very good trend. Our total asset has grown by 9.53% to CNY 25.14 trillion, and our liabilities is at CNY 23.2 trillion, with a growth of 9.28%. Our core performance is good. Our realized net profit is CNY 269.2 billion. That is a 5.32% increase. Our average ROA is 1.11%. That is a weighted average net ROA of 13.18%. Our capital adequacy ratio is at 17.52%, which is a leading figure when considering our peers. Our business trend is also good. I would like to talk about three areas. One is our ordinary deposit. Our current deposit composes of 56.8%. That is a year-on-year increase of 1.31 percentage points.
Another area is that we have strengthened our position as a retail bank leader. Our three numbers. One is our personal loans. It is at CNY 6.48 trillion, and it contributes 43.12% of our total loan balance. That is a 0.75 percentage point increase. Our net profit before tax for retail business is CNY 148.64 billion. That is a 45.51% contributor with an increase of 0.17 percentage points. Our contribution of retail to intermediary business has increased by 3.5 percentage points to 58.6%. Our inclusive finance, our residential mortgage, and our fintech work has been generating good results in leasing capacities. Our PowerPoint has already provided good information about this, and I will not go into detail. With the second characteristic, which is stable, it is visualized in two areas. One is our asset quality. It is actually improving and improving.
In 2019, our risk management capabilities continued to improve and our asset quality too. Our NPL ratio has come down by 0.04 percentage points at 1.3%. Our PCR, provision coverage ratio, is at 227.69%. That is an increase of 19.32 percentage points. Our anticipated adverse, our reverse difference between overdue loans and NPL is CNY -39.6 billion, which means that our quality is improving. Our inclusive finance is one of our three strategies. By end of 2019, we are serving [1.325 million] accounts. That is an increase of 370,000 accounts. Our three capabilities continued to improve, which is in line with the guidelines given to us by President Xi, which is that we need to serve the country's strategy, and we need to enhance our international competitiveness and our risk management capabilities.
This has been reported in detail from our PowerPoint, which I will not go into detail now. Thirdly, on the basis of being good and being stable, we are able to drive sustainability. Sustainability, first, has to be lifted up with our business concepts. Our bank is an international listed bank. Our goal is for sustainability, perpetuality. We wanted to build our business for 100 years, for 1,000 years, or even 10,000 years. So in our daily operation, we insisted on three things. One is prudency, and the second one is prudency, and so is the third one. So we insist that to be prudent and to be stable could drive our business for a long time. We have kept ourselves rational with the changes in the outside business environment and following the rules of a commercial bank. All of our performances are showing that.
Now, for all of our friends, you should have a very good understanding of what we mean by having a balanced and coordinated performance. Starting 2020 with the sudden dawn of the COVID-19 and the challenges that comes with it, with Mr. Chairman Tian Guoli's leadership, we have been accelerating our efforts to follow the instructions of President Xi, Chairman Xi, and the PBOC's instructions therein. We have launched 20 different measures in care of our employee, and also 30 others to support the economy and to fight the epidemics. That goes to say about the responsibility of us being a big state-owned bank. This is also a comprehensive stress test to our digital capabilities and our fintech. Lately, we have been stepping up our strategy on digital economy and digital operations.
During the epidemics, our bank has been relying on our fintech systems and measures to enable our employees to work from home and approve different types of applications for customers and products and services from afar, from home. We have been enabling, empowering the government and the different companies and the society in using our smart platform to conduct management of the properties, delivery of procurement, and to allow people from shopping from home. So our business and our management, therefore, has not been hugely impacted. Since the epidemic started, we have been showing ourselves as a big bank. We have accumulatively released over CNY 90 billion of loans to people who have been affected by the epidemics and set up a fund of CNY 5 billion to fight that. In order to help the Hubei province, we have delivered donations of over CNY 300 million.
Now into March, with the international pandemic launching, we have loaned a lot of anti-epidemic supplies to different people. We continue to use the proprietary cross-border international system to coordinate procurement of anti-epidemic supplies for different people. We have actually delivered over 400 million pieces of these. This is an act to help people of a common destiny. Going forward, we will continue to pay close attention to the effects of the international pandemic and its impact to the financial world, and to keep risk management prudent and to act rationally. Based on instructions of the nation and the strategy, we would help fight the epidemics. We would help the economy develop. We will keep the corporations alive as well as help the people, and to build our society to become a middle-class society.
We would like to contribute our skills and capabilities to fight this epidemics and to foster the continued development of the country. Now, we are moving into the question-and-answer session. Prior to asking a question, please name yourself and your institutions. Because of time constraint, please ask only one question at a time. Please ask your questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press the star and one, and then wait for your name to be called. The first question comes from Morgan Stanley, Mr. Xu Yan. Please ask your question.
Thank you for the opportunity to ask the first question. I am the Analyst from Morgan Stanley. My name is Xu Yan. Last year, you indeed have a very good performance. However, this year, you may face larger challenges.
I'd like to also ask a question regarding loan pricing. Because of the epidemics, the economy has slowed down. Lately, PBOC has drawn down the repo interest. However, the loan demand continues to be strong. The domestic market has a very huge demand. I'd like to ask, how do you balance between the capital cost and the demand for loans and risk management? What is your consideration about this, and what is the impact? How direct is Ministry of Finance's impact on this?
Thank you for the question from Morgan Stanley. I am thankful to Morgan Stanley for your continued support and care for us. Now, the sudden occurrence of the pandemic is a very important public hygiene, public health hazard. It has a huge impact to not only China's but also the international economy.
Various countries are using fiscal and monetary policies to ensure economic growth, especially after the G20 Special Summit this month. The leaders of the world have come to a consent and have sent out very strong messages. As a commercial bank, we are already in line with the economic behavior. So this epidemics definitely would have an impact on us. The China loan interest is practicing the LPR. Starting last year, the PBOC has already started to marketize this interest rate. This year, since March 1, we are also requiring the deposit. Regardless whether this is for individuals or for companies, it will need to be converted. So it will definitely have an impact on our business. The impact on the economy as well as the factors that we should consider in our business operation is mainly dependent on the quality of our customers.
The quality of our customers as well as the customer mix, goes together to determine our profitability. It is also dependent on the PBOC's requirement that at investment, consumption, and foreign trade, how do we follow the compliance and to deliver the strength of our bank. In investment, we need to support infrastructure, especially new ones. Also, we have to support the medical services. If our customer quality is good, if our customer base is sound, then I think with the downward trend of the interest rate, given that we are working on the same economic environment, if we can optimize our business now, optimize our customer base, optimize our strategies through refined management, then we can enhance our pricing capabilities and our risk management capabilities.
We remain confident that within the challenging environment that we will face this year, we can still keep steady growth of our business. Thank you.
Please, next question.
The next question is from Shanghai Securities. Ms. [Zhang Chengsheng], you can ask the question.
Thank you for the opportunity to ask this question. Good afternoon. My question is for quarter one, have you observed the impact of the epidemics on the retail, and do you see any coming down trend of the scale and the profitability? As a big retail bank, what is your outlook of the retail segment?
Thank you for your question. I will ask our Vice President, Mr. Ji Zhihong, to answer your question.
As impacted by the epidemic, the consumption of China has , you know, the impact has been great. From our retail business, we observe now that such an impact is not as evident as yet, and it is relatively small in mainly three areas, several areas. From the mortgage business, we still are enjoying on those demand that has been accumulated previously, and we are still enjoying growth. Another aspect would be the intermediary business. Some part of this business, especially the offline business, has been impacted in some ways.
However, we have been enhancing the development of our online business, and that sort of buffered the negative impact. We also see that the country would continue to push measures to enhance the economy. If we look at March, we already see that mortgage loans has become more alive and recovered from before. As a next step, we do anticipate that consumption would also become active again.
We see that the capital market development of China offers a very good future, and we may add on some intermediary businesses related to the capital market. The Chinese assets have been recognized or maybe nicely commented by some international investors. Given the epidemic and given the interest rate spread between China and international being bigger, Chinese assets could well be the choice of international investors going forward. We will enhance our service to international investors investing in China and also in domestic investors working in the capital markets. These are the areas that I'd like to talk about.
Next question, please.
Next question is from Ms. [Yan Meizhi] from UBS. Please ask your question.
Yes. Thank you for the opportunity to ask my question. I am from UBS. My name is [Yan Meizhi ].
I'd like to ask a question regarding the NIM trend. We see that after the epidemic, the government and the PBOC has asked the banks to cut interest rates, loan rates, and also to extend loans that could help industries. Just now we were talking about loan pricing coming down, and also at the liability side, there may also be some similar downward pressure. Can you talk about your outlook? Do you anticipate that deposit rates would come down? In 2020 NIM versus 2019, do you think it would keep stable or would it come down? If you anticipate that it would come down, by how much? How do we balance between government instruction to help the industry with our need to be profitable? Thank you for taking my question.
Thank you for your question. I ask our CFO, Mr. Xu Yiming, to take your question.
The NIM coming down is a trend. In 2019, our NIM was 2.26%. When comparing to 2018, it came down by 5 basis points. At that time it was 2.31%. In the future, 2020, I foresee that it would continue to come down. We anticipate that it will stay at around 10 basis points. I won't go into detail about the reasons for this trend, but in a nutshell, I think if we can maintain at 10 basis points, that would be quite good. Something that I'd like to explain is that something that you may hold to heart, and I've explained that before. Because with the NIM that we disclose, it is not possible to have a standardized way to disclose.
Each bank and their monthly or quarterly reports cannot be compared because we are not comparing apples with apples. It is very difficult to observe a trend through the figures of one or two quarters. Let me cite an example. I have communicated with you before. In 2017, we have adjusted our reporting, our disclosure way. Our credit card revenue at the time has not been consolidated into the total number. In 2017, we had made a change, which definitely is different from before, and it's not comparable. I see the same from our peers. The way and the format of disclosure, since they are all different, it is not easy to compare them. That does not go to say that this is not important.
What we need to look into is rather, with the same bank, if there are big fluctuations between quarters or year-on-year differences, then we definitely must find out why. This is key. Just now I've said, we anticipate that it would stabilize at 10 basis points. It would be good if we can do that. This is my basic outlook for the future. In 2019, why is it that we have come down by 5 basis points when compared to the year before that? There are several reasons. We actually have some increase and some decline. Our loan in 2019 has boosted our performance by 9 basis points, but there's also other factors that are pulling us down. For example, the cost of deposits in 2019. We had a 21 basis points of this, which drive our overall performance down.
So that means that in the future, in order to manage our NIM at a good level, we need to work on the loan pricing. We also need to enhance our loan structure and our risk management capabilities. As far as deposit is concerned, we need to pay attention to the costing of the deposit business. Our retail and our current deposit is a business that we have always insisted on, if we can ensure that this is a higher share of our total, because this is very important piece of our business. Therefore, we are spending efforts to get customers and get deposits. The 10 basis point that I talked about should be achievable if we have a systemic way of working on it. Thank you.
Next question is from Xinhua, Mr. [Wei] . You can ask your question now.
Management, good afternoon. My name is [Wei] from Xinhua. We see that at the beginning of the epidemic, some industries or corporations may have a difference in their capital needs. Do you see any such changes? Last year, our loan structure, did it go through any major change? Is that moving into this year? How do we encourage more companies to come and apply for a loan?
Well, thank you for your question. I will ask our Vice President, Mr. Zhang Gengsheng, who is responsible for risk management, to take your question.
Good afternoon. Just like you have said, because of this sudden onset of the pandemic, it has brought huge impact to the economy as well as the livelihood of the Chinese people, especially with the uncertainty of the international pandemic situation. It can bring huge impact too.
Regardless whether we are looking at the domestic or the international scenario, it is also important. I anticipate that our loan structure would definitely be changed this year. First of all, we have to invest in medical hygiene, health, and epidemic fighting measures. This is the basis. If we do not enhance our efforts in here, it would be problematic. Another area would be infrastructure. This investment will be about or more than CNY 1 trillion. The third one would be traditional infrastructure. This year is a very special year. We need to deliver a double performance or two times the performance, and we need to build our society in the middle class society, and we also need to work on removing poverty. Now with China, we anticipate that investment on infrastructures would be faster when compared to 2019, and also because China is part of the global supply chain.
Now, if the pandemic can come under control globally, that would create a smaller impact on our export and manufacturing. However, if this pandemic does not come under good control, then we anticipate that the impact would be huge for this part of our economy. Therefore, our loan structure this year, we have to be extra careful. All in all, it is still early to make a conclusion because we do not know how the pandemic will go globally. If truly the pandemic does not come under control even by quarter three, then frankly speaking, the impact to the Chinese economy would be huge. The bank supplies blood to the industry, so we would also be under great pressure too, and we would pay close attention to the development and act accordingly. Thank you.
Next question, please.
Next question is from Ping An. [ Ms. Doris Chen], please ask your question.
Thank you, management. My question would be focused on inclusive finance. Please analyze a bit more about the balance of loan for inclusive finance, especially after the epidemics have set out. It would have more direct impact on the small, medium, and micro services and manufacturers. So what is your outlook?
I will ask Mr. Zhang to take your question. Thank you.
The epidemics for companies, the biggest impact would be those that you talked about, those that would need inclusive finance, the small, medium, and the micro companies. They happen to play a very important role in the country's GDP. As you can see, a 5%, a 6%, and a 7%, and an 8%, and a 9%. That means these companies composes of 50% of the GDP, 60% of the tax revenue, and 70% of the innovation.
Therefore, why is it that they are under great impact? That is because they are small in scale, and they are like a sampan in a raging sea. The ability to fight the turmoil is small. Also, because of the stay home tactics to fight the epidemics, it has cut down hugely on consumption, like tourism, restaurants, hotels, et cetera. This impact is huge. Our bank, CCB, have to play a role in such time of turmoil. We try our best to support the medium, small, and micro industries' development. Inclusive finance is one of the three strategies of our bank. Unlike other banks, this would be unique to our bank. In the course of implementation, we indeed developed very stably and healthily. By end of 2019, our loan balance is at CNY 963 billion, and now it already exceeded CNY 1 trillion.
We are the only bank that has this type of business. At the beginning of the year, we saw an increase of CNY 353 billion, which is a 57.88% increase over the same period last year. This is way better than compliance requirement. Just now, we have already talked about that our inclusive finance customers is already at 1.325 million, which is a 370,000 addition to our total number of accounts. Our medium, small, micro new products balance is at 59 billion, which is a 108% increase over last year. At the same time, given the fast and good development, say by end of last year, the small, medium, micro loans NPL is less than 1%, which is much better than corporate loans. At the same time, we try our best to cut fees as is required of us.
We also try our best to provide to these customers, services of great value. At the start of this year, we have also launched some new measures. Mainly, there were four special measures and eight targeted measures, which I believe the media has already reported on. Our small, medium, micro-fast loans, we try to optimize it and make it better. We also work on personal loans, industry, and company loans, as well as loans to farmers. These are segmented, multi-layered, and comprehensive scope loans, of which small, micro loans have already formed into credit loans, secured loans, pledge loans, and platform loans, different products. We also have 10 odd different products for personal loans. By end of 2019, the small micro loans have accumulated a balance of CNY 1.7 trillion , whereas end of last year, it was only at slightly more than CNY 1 trillion.
We already serve 1.03 million accounts. China Construction Bank, I am not trying to be bold in here. What I am saying is that as far as inclusive finance is concerned, we are able to offer all options to customers from different walks of life. Regardless of who you are, you would be able to find a suitable product from our bank. Our products are very convenient to use. You can make an application from your cell phone, from your handphone. I honestly hope that our media friends would help promote some of our inclusive finance products. Tell them what these products can do. Last year, the Premier has visited us and has praised us with our products. If the Premier is saying that, it ought to be real and good, right? I honestly hope that you could help us promote these products.
I would like to supplement a few words. Just now, what we meant is that we hope that our media friends and our analyst friends can promote our products. The purpose of this is that we hope to be able to serve more small and micro customers so that more of these customers can enjoy the inclusiveness of the financial products that we offer. At the same time, we have 87% share of this market, and this will continue to strengthen our efforts to develop this market. This year, the regulators have required us, the big commercial banks in China, that the small micro loan business cannot be smaller than 30% of its total. Internally, we already have a good customer base and good trends.
We are confident that this number can be met, and we will continue to work on this strategy to help more small and micro, medium company, especially given the epidemics and the way that they suffer from epidemics, especially those that have had a normal, healthy business prior to the onset of the epidemics. For these companies, we will be there for them, not only at the moment of triumph, we will also be there in the hour of need. We will take the necessary measures to help these small, micro, medium companies so that they can ride the tide and be able to survive.
Next question is from 21st Century Economic News, Ms. [Lee Yumi], please ask your question now.
Thank you, management. I have two questions. The first is related to residential leasing. Last year, we discovered that a lot of these long lease apartment, the profitability has been under pressure. The cash flow has been a problem. What is the performance and what is your plan regarding this area? Second, I discovered that there are CNY 7 billion of non-standard assets. What is the target and the planning here?
We limit each of you to one question, but since you have asked, we would answer your question. I will ask Mr. Ji to take your question.
Regarding residential leasing, this is one of the three strategies of our bank. In the last couple of years, CCB has been pushing the residential leasing strategy.
To help form an ecosystem of leased residential apartments in China, to maximize its roles and functions, to build an ecosystem in order to develop this market, and to probe into various models and types of this particular segment. We have had some good progress. The overall platform of residential leasing that we have been able to build is multi-tiered, including government service system, private housing, public housing, et cetera. Our coverage of the platform and the level of activity there has been rising quickly. As of end of last year, we have been able to cover over 95% of the local cities. We have accumulated over 21 million users and showcased over 20 million of different apartments. We also probed into the model of separating ownership and rental rights. We have been showcasing over 800,000 sets of apartments of this type.
Our loan regarding this segment has been well. We have set up long leases and to help build CCB's and development of certain villas and regions. We are working well with our upstream and lower streams, so that we can build the ecosystem and to build a high efficiency, a highly effective business. We have been accumulating experience and we have been pushing forward the development and the optimization of this ecosystem. Products such as a long lease, for example, and also to materialize the concept of a place is also a home. We also provide different insurance products. We also support the senior care services, senior people resting at home, so that we cover both the apartment management and consumption. We have been linking all that into a single chain.
Just now, you have said that some long lease apartments may have faced some cash flow difficulties. Some renters, their income flow may have suffered in some ways. We have also observed that happening. But all of these are temporary. We believe that this is only a temporary impact. Given time, it will improve. We are willing to work with these leasing companies and cooperate with them to overcome difficulties. During the epidemics, we have worked with these service companies to provide to those medical staff who are working on the epidemics and to waive the rent and also to provide for free, some anti-epidemics supplies. Also to provide help and a place for the medical staff to stay during the epidemics for free. We have afforded over 1,500 sets for this particular use. All in all, the residential leasing future is quite good, we believe.
We have been enhancing the younger groups and the lower and middle income group, and also newcomers to the cities, and also users of public housing. We believe that all of these clusters have a high demand for residential leasing. We will also work with the country's strategy to build this particular segment and to safely and prudently implement the strategy on this part. Regarding your second question, you have asked a very key and important question. Our non-standard asset, the total balance is more than CNY 720 billion, that is true, and the share is 33.62%, which is compliant to the 35% as required by the regulators. However, I'd like for you to look at two other sets of numbers.
Our standard asset is in over CNY 1 trillion, and that is 47% of our total asset, and it has increased by 9.87 % points, with an increase of CNY 190 billion. With the new rules of asset management, we have been able to push forward economic products. We were at the balance of CNY 478.5 billion. That is a CNY 178.9 billion increase and a 60% increase, close to 60% at 59.71%. This is a very good development. We are compliant to the regulators, and it is also in line with our development strategy. With the rectification of the non-standard assets, that is about CNY 700 billion of it is a challenge for each and every bank. We are combing through this CNY 700 billion of non-standard assets, and we are also following the requirement and guidance of the regulators.
You are aware that such rectification, the smooth implementation of the rectification, I mean about this, that a lot of measures have been launched, and we would take an active role. We will take the initiative to conduct such rectification so that our work on the non-standard assets could be satisfactorily and safely conducted.
Next question, please.
Yes, the next one is from Mr. Yang Shuo from Goldman Sachs.
Thank you for the opportunity to ask the question. I am Yang Shuo from Goldman Sachs. I have only one question. I would like to understand the asset disposal and asset distribution for 2020, including loans and bonds. Especially in the last couple of days, we have seen the launching of the special sovereign debt. I would like to ask, what are your views about this special sovereign debt?
As far as asset distribution, I would like to ask Mr. Xu to take your question.
Thank you for your question. In 2020, our asset plan for 2020 at this time for loans, new additions should be around CNY 1,500 billion, and we have already planned out for CNY 1,600 billion. Sub-segment to a further breakdown is that for corporation, it is at CNY 685 billion and CNY 765 billion for personal loans. You also asked about investments. The bonds investments, we have planned to add CNY 350 billion of new bonds, of which local bonds would be the bigger piece at an amount of close to CNY 295 billion. The other ones would be credit debts, credit bonds and sovereign bonds, et cetera. Local bonds would continue to be the bigger piece because of market demand, and also from the bank's business perspective, local government bonds continues to offer a higher yield and better risk management environment. This will continue to be our focus.
Next question, please.
Next question is from Ming Pao of Hong Kong, Mr. [Ou Yang Wei Fang].
Thank you, management. Judging from your PowerPoint, the NPL ratio would face a lot more pressure this year. For February, the NPL ratio has climbed to 0.06 percentage points. With the allowance to postpone payment until end of February, do you anticipate the NPL ratio to climb a bit more? What is your outlook for the overall year?
Thank you for your question. Regarding asset quality, I would like to ask our CRO, Mr. Jin, to answer your question.
For this year, the asset volume will definitely be impacted. It is only the extent of the impact that one needs to look into. Just now you were talking about the regulating policy. There are a lot of different factors.
The first round, the domestic epidemics, we know quite clearly what the impact is, given the stress tests. However, with the international epidemics, it remains to be seen. Also with policies of different countries, fiscal, monetary policies and those policies for mitigations and for customers, various policies. These would also have a big impact on us. These policies try to buy time, despite that the difficulties may surface later on, but this is necessary in order to help the corporations survive. By surviving, you solve the problem. Also, with the bigger economic environment, and also our loan structure, our NPL disposal rate, et cetera. All of these are important factors that we have to look into.
Just now you were talking about postponement of payment.
Yes, it carries an impact, but a small one. Because those impacted by the epidemics, there exist very clear standards.
Hong Kong has it, and we also have it. We require that the companies should have the ability to continue its business, and it is only impacted by the epidemics. These, we welcome their applications for loans. There are also other corporations that are subject to the supply chain reform, meaning those that lack the ability to carry on the business. This type of customers, there are more of these because of the reform, and we have classified them into the non-paying ones, and disposal of these have almost been done. The third piece is that this classification is strictly in line with regulations. We look at the actual situation. The policy is that for these companies facing temporary challenges, we do not downgrade the rating, and it does not hurt their credit records.
Given our good customer base, there would be very little impact on the asset quality while implementing the policies, implementing the national guidelines.
Next question, please.
This is Ms. Lynn Lee from Morgan Chase. Thank you for the opportunity. My question also is about asset quality. Can you please walk us through, since end of February, credit card loans and inclusive finance, small micro company loans, what is the default rate there, and what is the anticipated rate? Also in 2019 data, we see that overseas NPL ratio has increased greatly. Is it because we have an adjustment with our non-performing loans management, or is it truly difficulties faced by our overseas customers? Because since COVID-19 onset, have we done any stress test with our international business?
Say if the COVID-19 comes under control by quarter three or not, then what would be the anticipated NPL ratio under these different scenarios?
So I'll continue to ask Mr. Jin to take your question.
Observing from the last two months, regardless whether it is corporate or personal credit loans, overall asset quality remains stable. However, the default has increased. When comparing to last year, this is quite in line. That's because in the last two months, our credit cards typically would go through a negative growth, and this year the negative growth would be bigger. No growth. Of course, the interest rate would go up. I mean, the NPL ratio would go up, but overall the impact is not big, especially with inclusive finance. In 2019, we have a big improvement in the NPL ratio. It came down by over 1 percentage point.
Now, this is because of three years of preparation and structural reform. Our risk management tools and measures has been playing their role, and our speedy exposure and disposal measures have also worked. That has caused our asset quality to grow steadily. This year, our judgment is that overall, we anticipate a good asset quality and improving slightly. Do we expect a big improvement? Well, we don't think so. We would continue to step up our efforts in the inclusive finance sector. If we look at the last two months, PBOC has given a policy, and those customers that have truly submitted an application to postpone payment, that ratio is not high. It ranges from 4%, 5%, and at maximum 6%, given different types of customers.
Most of the loans have been repaid, and we analyze that it has to do with the current liquidity and our credit policy. Various banks have stepped up their service to the micro and small businesses, as well as the credit card segment. These are focuses of different banks. As far as liquidity is concerned, there are some insurance as far as this is concerned. As far as default rate, we have seen some small increase, but by March, it has come down evidently. I personally anticipate that the default ratio would be kept stable with slight increases. This is your first question. You also asked about NPL for overseas market. The data I have on hand is different from yours. Our overseas asset quality was also improving as far as I'm concerned, because after disposal of a default, then our NPL actually improved.
Does your data include our overseas subsidiaries?
There may be higher NPL ratios of a particular subsidiary, but this is a particular event and not an overall, and it does not have a big impact on our big picture. We also pay special attention. After several years of reform, we have taken the initiative to focus our business mix and developed businesses mainly in syndicated loans and also in domestically linked businesses, which offer us a good customer base. The stress test about the epidemic's impact and analysis, all of these works are being conducted. We are fully aware of the various companies, including various investors. We pay close attention to your comments and would follow the situation very closely. However, we believe that the Chinese economy, all in all, is robust and agile, and our customer base continues to be solid.
The implementation of our three strategies, our structural reform, is actually very reasonable, and our smart risk management system is very good. We feel that we have the necessary tools for risk management, and they are playing a huge role. We remain confident that regardless of whether it's inclusive finance overseas or credit cards or overall loans, we are confident that we can keep it safe, and there would not be a huge hike in defaults.
Next question, please.
Next question is from Caixin. Ms. Wei Xiaomei, please ask your question.
Management, good afternoon. I have a small question. There are rumors in the market that your bank is going to set up a consumer financing company. Is that true, and can you talk us through your strategy around this topic? Consumer financing company.
I ask Mr. Ji Zhihong to take your question.
Well, we also read from media reports about this piece of news. To set up a consumer financing company, this is not something that started just now. We have been working on this for quite a long time already. All in all, with Chinese economy development, definitely we would see a direction that is domestic demand driven, and consumption would continue to play a very important role in GDP. Lately, we have seen credit cards and consumptions are negatively impacted by the epidemics. However, we anticipate that with the epidemics becoming under control, the market potentials remain strong, especially in certain sub-segments, consumption segments, and structural upgrades, and enhancement of consumption quality. All in all, consumption financing, the future remains bright.
From the perspective of a big Chinese bank, the ratio of this business as the ratio of the total remains low, and we would continue to step up our efforts in this area to enlarge our coverage in the consumer financing space and to catch the demand and opportunities of a consumption upgrade.
Next question, please.
Next question is from Bank of America, Ms. Winnie Wu, please ask question.
Thank you. I have a question about our intermediary business. Last year, we see handling fee increased to a double-digit space, which is quite good, the best of the five and six years, and it is one of the best amongst the bigger banks. Now, please share your outlook of the handling fee in this year. Last year, it is mainly wealth management and credit card handling fees that were showing some good results.
Now, this year with some unemployment and pressure from consumers, then do we need to adjust our policy, our strategy?
I would like to ask Mr. Hu Changmiao, our Secretary to the Board, to take this question.
Thank you, Ms. Wu, for your question. With intermediary business, it played a very important role in the development of our bank for the last two or three years. It can offer new revenue source and to minimize our reliance on NIM profit. With retail business, our corporate—w e have stepped up on our efforts to develop the corporate market. This piece of business has grown quite well. Now, this year with the epidemics undergoing, as a big bank, we definitely would need to step up on our support to the industries and the real economy.
We have already offered some free or low cost or discounted services to help industries fight the epidemics. As next step, our bank will continue to help various industries to get back to normal work. We believe that handling fees income would be under pressure this year. However, we will step up our efforts to keep a positive, a good trend for our intermediary business development. Also, at the same time, we would comply with the PBOC requirement to help the industries to fight the epidemics. Our growth this year would not be as high as last year.
Last question.
Last question is from Hong Kong Commercial Daily, Ms. Li Xiaoying, please ask your question now.
Good afternoon. Thank you for the opportunity, and I hope that next time with the interim result announcement, we do not have to do it via telephone.
Just now we were talking about overseas development. Would there be any adjustments to your overseas business development plan? I heard you talked a lot about some analysis. Can you provide us with a summary as to what is the biggest impact this epidemic has on the bank?
Thank you for your question. Regardless whether there is the pandemic or not, China Construction Bank has already set its goal for overseas, and that is compliance first, prudent development. This is a long-term policy of ours and strategy of ours. We will continue to follow this line to build our overseas business. This is a result of some prudent analysis that we have done. Our overseas institutions, our overseas subsidiaries, when we were talking about our asset quality and trends, Mr. Yanmin has already told you that our overseas development remains stable and good.
The impact of the epidemics to different countries are different, and that, of course, means different impacts to our different overseas developed businesses. But as to what that impact is, we have yet to see. But the overall impact of the epidemics to China and to the world is big. For China, we believe that the impact came from the time when the epidemic broke out in China. However, the international epidemics also have a big impact on us. However, we believe that because the main leaders of the world, the meeting on the 26th by the G20 Special Summit, has come to two consents. One is solidarity in fighting the virus, and secondly, macro coordination to ensure this stable development of macro economy. For China, the economic development is mainly driven by domestic demand.
As you can see from the media, the statistic bureau has announced three very clear numbers: 2019 consumptions contribution is 57.8%, t he contribution by capital investment is 31.2%, whereas import and export was an 11% contributor. That means that the Chinese GDP and the effect of its supply chain reform would afford us with a rather agile economy. In addition, since January, when the epidemic started, the central government has been working on both fighting the epidemics and keeping the economy stable. The central government has moved very quickly and decisively. 80%- 90% of the main industries have gone back to regular production. Our network, 97%- 98% of our network is already operational. This is fast and nimble and agile. The way that we see it at this point is that the risk is under control.
That is why at the beginning, I told you, I reported to you that this epidemic impact on us as a whole, we are confident that despite all the challenges, we would be able to keep reasonable growth this year and to ensure a reasonable return to our investors. Ladies and gentlemen, time flies. one hour and 15- minutes of time allocation has already been spent, and we are over time already. Of course, we are very willing to spend more time with friends from the media and analysts. However, every time we are short of time. We are limited by the time that we have. Now, this epidemic not only impacted economies and finance, it also takes lives. I hope that you will stay away from the virus, cherish life, be united, and help up each other. We hope that the epidemics would be over soon.
I am very in agreement with just now the Hong Kong Commercial Daily reporter has wished that in the interim result announcement, we could do it face to face. I also wish you safety and health. Thank you for your questions. Our result announcement session would close now. If you have any other questions, please contact our Board of Directors office as well as our relevant department. I continue to thank our analysts and our media for your long-term support and care for China Construction Bank. Thank you very much.